Claremont hit by duty `black hole'
Saturday 20 June 1998
The shares were suspended until the company issued a statement clarifying the situation. It said that during the preparation of its accounts a problem had emerged over unpaid import duties.
The extent of the "black hole" in the accounts is not yet known. However, Claremont said that it will produce its results by next Friday and will reveal the scale of the problem then.
Butterfield Securities analyst Richard Ratner said he believed the unpaid import duties reportedly owed by the company are unlikely to total more than pounds 2.5m.
He said the unpaid import duties were "not malpractice, it was incompetence at one subsidiary specialising in children's wear". He added: "It was a misinterpretation of the rules on how import duties are calculated."
Claremont shares were later re-listed and closed 61 per cent down at 15p after hitting 10p at one point.
The shares stood at more than 100p a year ago. The tax bill will come on top of a significant loss for the year, which was outlined by Claremont in a profits warning in March.
Claremont's March warning was issued during the Chancellor's budget speech. It said then that it was postponing the publication of its annual results pending an enquiry by its auditors, Ernst & Young, into customs duty liabilities.
It was suggested that no duty had been paid on its imports, which account for 20 per cent of group sales. The company had been expected to report pre-tax profits of pounds 2m before exceptional items.
There have been concerns in the market that the cool June weather has hit British clothing retailers and left some with large quantities of unsold stock. There have been concerns about high levels of returns at M&S, to which Claremont supplies ladieswear and lingerie.
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